Almost all Canadian crude oil exports went to the United States in 2023: CER

This article was published by The Canada Energy Regulator on Aug. 20, 2024.

Crude oil exports continued to grow in 2023, reaching a record high of 4 million barrels per (MMb/d), an increase of 3 per cent from 2022. This growth was supported by record high Canadian oil production in 2023. In 2023, crude oil exports amounted to 81 per cent of the country’s total crude oil production⁽¹⁾⁽²⁾. These exports were valued at $124 billion, representing 16 per cent of Canada’s total export value⁽³⁾.

The United States (U.S.) remains the primary destination for Canadian crude oil, receiving approximately 97 per cent of Canada’s crude oil exports in 2023. The remaining 3 per cent was exported to non-U.S. destinations including the Netherlands, United Kingdom, Germany, Spain, France, Norway, Italy, and Hong Kong (Figure 1). Alberta, Canada’s largest oil producer, is also the largest source of crude oil exports to the U.S. (Figure 1). In 2023, Alberta contributed 87.4 per cent of the total volume exported to the U.S. followed by Saskatchewan with 8.9 per cent, while Newfoundland and Labrador, British Columbia (B.C.), and Manitoba contribute 1.9 per cent, 1.3 per cent, and 0.4 per cent, respectively⁽⁴⁾.

Figure 1: Annual Canadian Crude Oil Exports by Province to International Destinations

The destinations for crude oil exports to the U.S. are grouped into five regions or districts known as PADDs (Petroleum Administration for Defense Districts)⁽⁵⁾ (Figure 2). Figure 3 shows that in 2023, Canadian crude oil exports to the U.S. were primarily received by PADD 2 (U.S. Midwest), which accounted for 61.8 per cent of the total volume. PADD 3 (U.S. Gulf Coast) followed with 18.6 per cent, while PADD 5 (West Coast), PADD  4 (U.S. Rocky Mountain), and PADD 1 (U.S. East Coast) received approximately 7.2 per cent, 6.8 per cent, and 2.6 per cent respectively. This is consistent with trends from previous years, where PADD 2 and PADD 3 are the primary receiving areas. This reflects the well-developed pipeline infrastructure that connects Canadian oil-producing regions, particularly in Alberta and Saskatchewan, to key U.S. refining hubs in PADD 2 and PADD 3.

Figure 2: United States PADD Regions and Operating Refinery Capacity as of 1 January, 2023

Over the last decade, there has been a notable shift in the share of total exports from Canada to the different U.S. regions (PADDs), particularly with PADD 3. Exports to PADD 3 increased by 505 per cent from 2013 to 2023, followed by PADD 5, 2, and 4 with 47 per cent, 38 per cent, and 14 per cent increase, respectively, while PADD 1 declined by 48 per cent. Canadian oil exports gained a growing share in PADD 3 due to growing production of Canadian crude oil (particularly from the oil sands)⁽⁶⁾⁽⁷⁾, the ability to process heavy crude by Gulf Coast refineries (PADD 3), and declining shipment from other countries (e.g. Mexico and Venezuela)⁽⁸⁾⁽⁹⁾. The decline in crude oil exports from Canada to PADD 1 is linked to the declining refinery capacity in this region. Over the last decade, operating refinery capacity in PADD 1 decreased from 1.27 MMb/d in 2013 to 0.88 MMb/d in 2023⁽¹⁰⁾ due to the closure of several refineries⁽¹¹⁾.

With the Trans Mountain Expanded System fully in-service, the export patterns may change over time, such as the potential for increased exports to the U.S. PADD 5 and Asian markets.

Figure 3: Canadian Crude Oil Export Volumes by Destination

Pipelines and Refineries

The Enbridge Mainline System is the largest pipeline system in North America and the primary pipeline system for transporting crude oil from western Canada to PADD 2 (Midwest), and through connecting pipelines, to PADD 3 (Gulf Coast). Similarly, the Keystone Pipeline delivers Canadian crude oil to PADD 2 (Midwest) and, through the connecting Marketlink Pipeline, into PADD 3 (Gulf Coast). The Trans Mountain Expanded System mainly exports crude from Canadian oil to PADD 5 (West Coast) and other international markets. Additional information on pipelines is available: CER Pipeline Profiles.

Many U.S. refineries, especially those in PADD 2 and PADD 3, are designed to process a wide range of crude oil types, including heavy oil and diluted bitumen crude oil from Canada’s oil sands, making them key markets for Canadian exports. Additional information on refineries and how crude oil is turned into various products is available: How does a refinery turn crude oil into products like gasoline and diesel?

Footnotes

1. Since 2013, crude oil exports ranged from 75 per cent and 82 per cent of the country’s total crude oil production (Provincial crude oil production compiled by the CER and CER Monthly Oil Export Statistics).
2. CER’s crude oil production statistics include condensate. CER’s crude oil export statistics also include condensate that was used in diluting heavy oil and bitumen for export. A fraction of the diluted heavy oil and bitumen exported from Canada also includes imported diluent (condensate). Oil sands bitumen must be blended with diluent for transportation on pipelines, and oil sands demand for diluent is greater than domestic supply.
3. Following crude oil, passenger cars and light trucks represent the next largest export category at 9 per cent. Crude oil has been the largest exported commodity since 2008, except for 2015, 2016, and 2018 where it was second after passenger cars and light trucks (International merchandise trade by commodity, monthly).
4. Alberta predominantly produces heavy and bitumen crude oil from the oil sands, while Saskatchewan produces heavy and light crude oil from conventional reservoirs. Newfoundland and Labrador extract light, sweet crude from offshore fields, and B.C. and Manitoba produce conventional light oil (CER – Estimated Production of Canadian Crude Oil and Equivalent).
5. The Petroleum Administration for Defense Districts (PADDs) are geographic aggregations of the 50 U.S. States and the District of Columbia into five districts: PADD 1 is the East Coast, PADD 2 the Midwest, PADD 3 the Gulf Coast, PADD 4 the Rocky Mountain Region, and PADD 5 the West Coast. PADDs were originally developed in the 1940s to help geographically ration fuel in the event of war. In recent years, U.S. oil data is generally tracked by PADD.
6. Canadian oil production increased from 3.5 million barrels per day in 2013 to 4.9 million barrels per day in 2023, representing a 41 per cent increase over the last decade (CER – Estimated Production of Canadian Crude Oil and Equivalent).
7. Crude oil exports to the U.S. have increased at a similar pace to production. More information on Canada’s crude oil exports in relation to Canada’s oil production is available: CER – Market Snapshot: Canada’s crude oil exports kept pace with production over the last decade.
8. EIA, PADD imports by Country of Origin
9. This led to expansions in western Canada of oil pipeline takeaway capacity and the development of more crude-by-rail facilities.
10. East Coast (PADD 1) Refinery Operating Atmospheric Crude Oil Distillation Capacity as of January 1 (Barrels per Calendar Day)
11. Annual Energy Outlook – Refinery closures lower domestic crude oil distillation operating capacity, but refinery utilization rates remain flat over the long term – U.S. Energy Information Administration (EIA)